A Process Structured to Deliver Results

The goal of our investment process and selection is to narrow the pool of potential investments to the most attractive profit opportunities relative to the risk involved. The common thread running throughout this process is the consistent adherence to the building blocks of valuation – which involves the simultaneous analysis of growth, risk and return (e.g. profit and/or cash flow).



Our investment process is an iterative process that includes six major steps:

 

	Idea Generation Our research team continuously monitors information sources and conducts analyses on changes in the complex global economy and its effects on particular sectors. The team meets on a regular basis to share information, sector expertise and to discuss secular themes and macro-economic trends. The team also examines particular opportunistic situations that arise as a result of various macro-economic and sector dynamics. These discussions lead to areas of research focus, honing more detailed efforts later in the process.
	Segmentation Once a set of ideas are generated, our research team prioritizes the various opportunities through an examination of competitive dynamics and market capitalization stratification. This step allows the research team to focus on and expend future research time and resources towards only the best opportunities. In its idea segmentation, the team looks to identify strong competitive positioning along with market capitalization sizes that tend to fly under the radar of many Wall Street analysts. While not restricting ourselves to any one asset size, we pride ourselves on finding the hidden gems that do not get the same attention as other companies in the marketplace.
	Refinement With the identification and segmentation of specific opportunities to pursue, the research team applies quantitative screens to these areas of interest. These quantitative screens have been developed over time, based on accumulated research in the areas of interest, and modified as more is learned and as conditions in the economy change. The research team then applies its rational valuation framework to the opportunities in order to evaluate each potential investment on the basis of growth, risk and return. The research team focuses on only those securities in which the current purchase price is significantly less than the current value identified by our analysis.
	Selection Having narrowed down the opportunities to a manageable list, the next stage of the investment process is for the research team to conduct in-depth analyses on the opportunities. Our team seeks out to test those opportunities with clear roadmaps for profitability, tangible business models and attractive valuations. We fully characterize the sustainability of competitive advantage, the rationality of each business plan, and other key fundamental criteria. We work to establish and maintain a relationship with the management team of the companies we examine, and ask them probing questions about their strategy, operations, and plans for the future. The culmination of all of these efforts is the selection of the investment ideas that are the most attractive relative to our criteria and the results of our analyses.
	Portfolio Allocation Having selected the best ideas to pursue for investment, our team then determines how to allocate the investments among our Private Wealth clients. Each client’s portfolio is carefully considered in terms of suitability, current allocation, and investment profile.
	Feedback Once we have completed the allocation of the best investment ideas to our clients’ portfolios, our process continues with one additional step. In line with our quest for continuous improvement, we analyze our holdings on an ongoing basis to ensure that each of our investments continues to meet our stringent requirements. We use this information along with information we learned along the way in the investment process to improve our ongoing research efforts and to make necessary modifications. This learning loop is important for us in adapting our process within an ever evolving global economy and changing market conditions.